Daniel Sneider is associate director for research of the Shorenstein Asia-Pacific Research Center at Stanford University and co-director of the center’s Divided Memories and Reconciliation project.

Relations between U.S. allies Japan and South Korea have descended to another low, fueled by issues of wartime history and the still-poisonous legacy of Japan’s harsh colonial rule over Korea from 1910 to 1945. The two countries’ leaders have not met since May 2012, and polls show that three times more Koreans view China favorably than Japan. A senior adviser to the Japanese prime minister recently suggested to me that the United States might no longer be given a free pass to use its bases in Japan to support South Korea in a war.

This dysfunctional relationship threatens to undermine U.S. security interests, including dealing with a rising China and an aggressive North Korea. For too long, U.S. policymakers have told themselves that wartime memories will eventually fade. It is clear that the passage of time cannot by itself cure the corrosive effect of historical injustice or dim the fires of nationalism among younger generations of Northeast Asians.

Unfortunately for the United States, the reality is that neither Japan nor South Korea seems capable of finding a path toward reconciliation on its own. In addition, the United States bears a historical responsibility for the unfinished nature of the postwar settlement and the subsequent Cold War system that blocked reconciliation.

There are, however, practical steps that could improve this situation. The biggest issue on the agenda should be compensation for all individual victims of the system of forced labor the Japanese empire used during wartime — beginning with the Sino-Japanese war in 1937 — including “comfort women” who were coerced into sexual servitude. The Japanese government, with official U.S. support, has long insisted that the issue of compensation was settled by the San Francisco Peace Treaty and by the agreements normalizing relations with China and South Korea. But some legal scholars, including some Japanese, argue that a settlement between states does not bar individuals from seeking compensation.

Recent South Korean court decisions have upheld this principle. In July, two high courts ordered major Japanese firms — Mitsubishi Heavy Industries, Nippon Steel and Sumitomo Metal Corp. — to pay Koreans who were forced to labor in their factories and mines during the war. Korean historians believe that about 1.2 million Koreans were forced to work during the war and that some 300 Japanese companies still in operation used such workers.

Japanese policymakers are alarmed that Japanese company assets could be seized if they refuse to pay, further fraying relations. But rather than seeing this as a threat, the Japanese should view this is as an opportunity to provide justice for those victims, most of whom are in their final years.

Japan should follow the model of the German Fund for the Future, formally known as the Foundation “Remembrance, Responsibility and Future.” The 5.2 billion euro fund, founded in 2000, is a joint project of the German government and the German private corporations that used forced labor during World War II. In cooperation with international partner organizations, it has compensated more than 1.6 million survivors in almost 100 countries. The foundation continues to conduct research and education programs.

Senior Clinton administration officials, led by then-deputy Treasury secretary Stuart Eizenstat , played a central role in the complex negotiation with multi-nation governments and citizen groups that led to the formation of the German fund and a similar one in Austria. Their involvement was prompted in part by lawsuits filed against German firms in U.S. courts. U.S. officials saw it as in the country’s national interest to reduce tensions with Germany and resolve the issue for all forced laborers, not just those filing suit.

Washington needs to play the same role today with Japan. For their part, Korea and China and groups representing victims of forced labor should publicly accept this solution as a final settlement of all issues of compensation. The Japanese need assurance that this would bring real closure.

This would, of course, be a bold and politically difficult step for all nations involved. The United States must abandon its position of neutrality on wartime history issues, as it is not really a neutral party, and step forward. Japanese leaders must break with the habits of defensiveness about the past and take the initiative. And Japan’s wartime victims must be ready to relinquish the use of history as a political weapon.

Only this kind of effort can break the dangerous stalemate about the past that threatens the future of Northeast Asia.

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